MiMedx – Open Letter to MiMedx

On July 2, 2018 MiMedx announced the resignation of MiMedx CEO and Founder, Parker H. Petit, and the appointment of Mr. David Coles, a Managing Director of Alvarez & Marsal, as the company’s interim CEO.

The appointment of Mr. Coles follows MiMedx’s engagement of KPMG and King & Spalding, who we understand have been tasked with, among other things, conducting an independent internal investigation into MiMedx sales practices .

Viceroy understands that a key element of these internal investigations concerns MiMedx’s conduct with the United States Department of Veteran’s Affairs (DVA); specifically, the allegations of channel stuffing and the subsequent indictment of DVA physicians utilizing MiMedx products. These physicians are in the process of cooperating with the US Attorney General’s case in relation to the charges alleged in the criminal filings including receiving bribes and inducements, and over-use of MiMedx product within the VA.

Viceroy Research has been made aware of links between other Alvarez & Marsal and a cohort of individuals allegedly exercising undue influence over the DVA, colloquially referred to as the “Mar-a-Lago Crowd”.

Given the depth of investigations occurring at MiMedx relating to the company’s conduct with the DVA, Viceroy believe the appointment of Alvarez & Marsal represents an irremediable conflict of interest to MiMedx’s ongoing internal investigations, and to the investigations we understand are ongoing within the DVA and other federal regulatory entities.

We have addressed a separate letter to the Department of Justice and the DVA’s ethics committee outlining what we believe is a serious conflict of interest and undue influence within the DVA of several parties.Further, we believe that it is irresponsible that this group, when exposed by journalists, was saved from a congressional hearing by longtime friend of former MiMedx CEO Petit, Senator Jonny Isakson, who has benefited greatly from donations from MiMedx and Petit.

Enclosed is a brief report detailing our investigation into this matter. A more comprehensive report will be published post VA OIG approval. The PCAOB and Investigators has stated that “When an auditor is confronted with multiple indicators of problematic revenue recognition … he or she must get to the bottom of the relevant issues, including digging into management’s representations.” We stand ready to assist in this effort and sincerely appreciate your attention to this extremely important matter.